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Our Sales & Distribution Network

We sell and distribute our products through a network of authorized dealers or distributors, who further sell our products to retailers and other end-consumers. However, our sales to power utilities, including to Power Utilities, and certain other institutional customers, such as developers of residential and commercial building projects and OEMs, are undertaken pursuant to direct contractual arrangements with such customers.

Additionally, we have a sales and marketing team, comprising 628 full-time employees, who are responsible for undertaking promotional activities in relation to our products.

Sales Through Our Authorized Dealer Network

As on December 31, 2015, we had appointed over 2,000 authorized dealers or distributors for distributing our electric equipment offerings, who act as our channel partners. Our authorized dealers further sell our products to retailers, certain developers of residential and commercial building projects, OEMs, Governmental Agencies and various industries or directly for domestic use. Our authorized dealers may also assist our sales and marketing team in undertaking price-related negotiations with institutional customers and in ensuring timely delivery of our products.

Our Company formulates annual sales policies containing general terms and conditions governing our relationship with our authorized dealers. Each authorized dealer is required to accept these terms and conditions pursuant to which, our Company issues a certificate of dealership. Each certificate of dealership is valid for one year and may be renewed at the instance of our Company.

Our annual sales policies prescribe our replacement policy, credit limits available to our authorized dealers, payment policy and the maximum discounts that may be allowed to an authorized dealer against early payment, amongst others. Our annual sales targets vary for each authorized dealer and credit limits extended to each dealer are determined based on historic and prospective sales targets. We record a sale of our product once they are invoiced to our authorized dealers. Our authorized dealers are responsible to make payments for our products sold within timelines stipulated in our sales policy and we offer cash discounts against early receipt of payment, which ranges from 1% to 3%, in inverse proportion to the credit period utilized. However, the credit period extended to an authorized dealer is fixed at the beginning of the fiscal year and capped at 60 days from the date of the invoice. Further, our Company reserves the right to review, revise and revoke this credit period, on a quarterly basis, in case of defaults and/or delays in payment.

Our authorized dealers are also a source of market information for our products, which aids our production teams in planning manufacturing estimates. The technical specifications for our products are primarily standardized and are classified through commercially standardized 'ratings'. This information is then made available to ourcentralized production team. Any excessive demand forecast may be offset by our historic sales data prior to commencement of manufacturing. This process is undertaken by our production team periodically. However, in respect of specialized products or products that require customization or modification, we commence manufacture only upon receipt of a confirmed order.

Supply To Power Utilities

Our sales to Power Utilities comprise primarily of sale of meters. For sales and supply to Power Utilities, we enter into direct contractual arrangements with them, pursuant to a bidding process and technical evaluation by such Power Utility. Our contract with each Power Utility typically provides the specifications for and quantities of the electric equipment to be manufactured and sold to them. Power Utilities award us supply contracts based their technical evaluation of our manufacturing capabilities, together with the price competitiveness of our electric equipment offerings. Power Utilities may also undertake testing of samples and an audit of our manufacturing facilities prior to awarding a supply contract.